Furthermore, the collapse of technology companies, led by the Meta Platform (formerly known as Facebook) and other high-growth companies has caused the S&P 500 to trade below earnings projections for the next 12 months at the end of January. had compared to the beginning of the year. It went from a multiple of 21.5 to 19.3, according to data from FactSet, in just one month.
With these valuation downgrades, attractive investment opportunities emerge that have not been seen for two years. However, money is cautious and hesitant at a time full of uncertainty and volatility.
Added to this is the conflict in Ukraine and its effect on the economy, especially its impact on the price of raw materials such as gas and oil.
Goodbye to free money
A good part of the rises in the stock market in the last two years have a lot to do with the fact that, in order to contain the crisis derived from the COVID pandemic, the monetary authority launched a battery of stimulus measures in the spring of 2020 The reductions in interest rates to 0%-0.25% and the injection of liquidity with the purchase of treasury bonds and titled mortgage debt (the so-called QE, quantitative easing) allowed investors a lot of comfort to bet even on high-value securities.
The improvement of the economy, especially in 2021, has allowed these bets to be later validated in strong company profits, especially compared to the results of a bad previous year dominated by activity closures due to the pandemic.
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